Correlation Between HORIZON ACTIVE and Travelers Companies

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Can any of the company-specific risk be diversified away by investing in both HORIZON ACTIVE and Travelers Companies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining HORIZON ACTIVE and Travelers Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HORIZON ACTIVE ASSET and The Travelers Companies, you can compare the effects of market volatilities on HORIZON ACTIVE and Travelers Companies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in HORIZON ACTIVE with a short position of Travelers Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of HORIZON ACTIVE and Travelers Companies.

Diversification Opportunities for HORIZON ACTIVE and Travelers Companies

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between HORIZON and Travelers is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding HORIZON ACTIVE ASSET and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies and HORIZON ACTIVE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on HORIZON ACTIVE ASSET are associated (or correlated) with Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of HORIZON ACTIVE i.e., HORIZON ACTIVE and Travelers Companies go up and down completely randomly.

Pair Corralation between HORIZON ACTIVE and Travelers Companies

Assuming the 90 days horizon HORIZON ACTIVE ASSET is expected to under-perform the Travelers Companies. In addition to that, HORIZON ACTIVE is 1.12 times more volatile than The Travelers Companies. It trades about 0.0 of its total potential returns per unit of risk. The Travelers Companies is currently generating about 0.1 per unit of volatility. If you would invest  18,239  in The Travelers Companies on September 11, 2022 and sell it today you would earn a total of  326.00  from holding The Travelers Companies or generate 1.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

HORIZON ACTIVE ASSET  vs.  The Travelers Companies

 Performance (%) 
       Timeline  
HORIZON ACTIVE ASSET 
HORIZON Performance
0 of 100
Over the last 90 days HORIZON ACTIVE ASSET has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, HORIZON ACTIVE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

HORIZON Price Channel

The Travelers Companies 
Travelers Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Travelers Companies may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Travelers Price Channel

HORIZON ACTIVE and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HORIZON ACTIVE and Travelers Companies

The main advantage of trading using opposite HORIZON ACTIVE and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HORIZON ACTIVE position performs unexpectedly, Travelers Companies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Travelers Companies will offset losses from the drop in Travelers Companies' long position.
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The idea behind HORIZON ACTIVE ASSET and The Travelers Companies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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